Glossary of Mortgage Terms

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maintenance costs

The cost of the upkeep of the house. These costs may be minor in cost and nature (replacing washers in the faucets) or major in cost and nature (new heating system or a new roof) and can apply to either the interior or exterior of the house.

margin

The amount a lender adds to the index of an adjustable rate mortgage to establish an adjusted interest rate. For example, a margin of 1.50 added to a 7 percent index establishes an adjusted interest rate of 8.50 percent.

market value

The price a property can realistically sell for, based upon comparable selling prices of other properties in the same area.

modification

A change in the terms of the mortgage note, such as a reduction in the interest rate or change in maturity date.

mortgage

A legal instrument in which property serves as security for the repayment of a loan. In some states, a deed of trust is used rather than a mortgage.

mortgage banker

A lender that originates, closes, services and sells mortgage loans to the secondary market.

mortgage broker

An intermediary between a borrower and a lender. A broker's expertise is to help borrowers find financing that they might not otherwise find themselves.

mortgage insurance

Money paid to insure the lender against loss due to foreclosure or loan default. Mortgage insurance is required on conventional loans with less than a 20 percent down payment. FHA mortgage insurance requires a payment of 1.5 percent of the loan amount to be paid at closing, as well as an annual fee of 0.5 percent of the loan amount added to each monthly payment.

mortgage interest

Interest rate charge for borrowing the money for the mortgage. It is a used to calculate the interest payment on the mortgage each month.

mortgage term

The length of time that a mortgage is scheduled to exist. Example: a 30-year mortgage term is for 30 years.

mortgagee

The lender.

mortgagor

The borrower.